Government negotiations with French energy giant EDF over subsidies for new
nuclear power are being conducted in “a smoke-filled room”, the chief
executive of rival company SSE claimed yesterday.

Ian Marchant attacked the lack of transparency in the talks as he warned MPs on the energy select committee that ministers’ plans to reform the energy sector were so complex and risky as to leave consumers “paying a higher price”.

Under the proposals, companies building nuclear and renewable power generation would be guaranteed a return on their investment through contracts setting the price they will be paid for electricity.

The energy Bill to introduce the contracts is not due to become law until next year, but EDF and its junior partner Centrica want to make an investment decision on their proposed new nuclear plant in Somerset by the end of 2012.

Ministers have promised to make 'enabling’ arrangements, effectively agreeing the contract early, and have already begun talks - even though they are yet to appoint external advisers.

In evidence to the committee, Mr Marchant said the Energy Secretary would be agreeing long-term contracts “without any level of public scrutiny of what is being paid for, how much is being paid or why it is being paid at a particular level”.

“Consumers will be liable to pay for contracts, potentially for up to 40 years, which they have no visibility of, and no input into,” he warned.

A Department of Energy and Climate Change spokesman said: “There will be full transparency provided over terms agreed, after a commercial negotiation.”

Vincent de Rivaz, chief executive of EDF Energy, used his own testimony to insist: “The strike price will not be defined in a cosy way, in a hidden decision... The result of the negotiation will be absolutely open and transparent.”

But he also warned that key questions of who would be the counterparty to guarantee the contracts, and whether the interim arrangements would be “legally robust”, would need to be resolved before the final investment decision could be taken.

Mr de Rivaz and executives from the other Big Six energy suppliers all criticised the current counterparty proposals. Ministers have already said they recognise industry complaints and will look at redrawing the proposals.